« Previous | Contents | Next »
Listen
The Economic Impact of Algal Toxin Closures on Shellfish Dependent Communities on the Scottish Coast and Implications for the Sector's Future Structure
EXECUTIVE SUMMARY
This Report presents an assessment of the economic impact of algal toxin closures on shellfish dependent communities on the Scottish coast and implications for the sector's future structure. The study was commissioned by the Fisheries and Rural Development Group of the Scottish Executive Environment and Rural Affairs Department.
Scallops have become an increasingly important fishery in the UK over the past ten years and there are extensive scallop grounds right around the coast of Scotland. Between 1991 and 1998 there has been reasonably steady growth in the volume of landings into Scotland by UK vessels. Landings grew from 8,900 tonnes in 1991 to over 16,600 by 1998, an annual average growth rate of 9.5%. Over the same period the value of these landings grew from 8.8m to 18m. Landings fell to just under 13,500 tonnes (16.5m) in 1999 and to just under 13,000 (15.8m) in 2000 before recovering in 2001 to 15,300 tonnes (19.5m).
Farmed shellfish production in Scotland is dominated by mussels and oysters with only small volumes of queen and king scallops being farmed. Total scallop and queen scallop farmed production in Scotland in 2000 was only three-quarters of one percent of total landings in Scotland.
Currently there are estimated to be in the region of 150-200 scallop divers in Scotland compared to in the region of 300 or so only a few years ago. Divers tend to work from smaller boats and so are dependent on specific fishing areas and on weather conditions.
The majority of the closures around the Scottish coast have been caused by the presence of ASP toxins. The first closures occurred in 1997 for a limited period around Orkney. In 1998 more intensive closures occurred to the east of Orkney lasting between 200 and 300 days. However, it was during 1999 that extensive harvesting bans were applied around the Scottish Coast, with the West Coast of Scotland from Cape Wrath down to the Northern Irish Coast severely affected in terms of both the area covered by the bans and the length of the bans.
In 2000, the extent and duration of the bans were less than in 1999 with areas around Orkney and along the West Coast being most affected but with the number of days that areas were closed often being only half that of 1999. During 2001, while the geographic extent of closures further reduced the intensity (i.e. number of days closed) of the ban increased in a number of areas. The evidence for 2002 (to end-March) shows further reductions with only 18 boxes having been affected so far and currently bans are in operation in only six boxes.
The choices to the ban facing the different parts of the industry vary. For vessels these include moving to other areas, targeting other species, or laying-up (permanently or temporarily). For divers the options include moving to other areas or leaving the industry. For farmers they include accepting the loss of sales or closing. For processors they include reducing the scale of operations, sourcing from elsewhere in Scotland, the UK, or perhaps abroad, or closing.
Although overall levels of landings declined there was a clear shift in 1999 to landings on the East Coast, as the West was closed and a shift back towards the West Coast in 2000 as the bans became less extensive. There does not seem to be any evidence of a widespread departure from the fishery and it appears that there has been no shift in the base location of the fleet though it may well have been fishing in a different pattern dictated in part by the closures.
It is suspected, however, that the data does not reveal the true extent of the impact on the catching sector and consequentially on the downstream sectors. Most business enterprises faced with unfavourable trading conditions will soldier on, despite making losses, for as long as they can in order to preserve their trading links, sources of supply and customer goodwill, until times improve. In this respect fishing enterprises are no different from others and as a rough general rule they appear to be able to run with losses for about two years before their position becomes untenable in large numbers.
Reviewing all of the evidence for the nature and scale of the impact of the scallop fishing bans associated with algal toxins the following conclusions can be drawn:
There has been a significant impact in terms of reductions in the value of scallops landed in Scotland as a result of the fishing bans. The total value of landings into the UK by Scottish vessels fell by 11% between 1998 and 1999.
The negative impact was primarily focused on West coast ports, with increases of landings at East coast ports in 1999 compared to 2000. This does not imply a reduction in fishing employment on the West coast although it will imply some local output impacts as stores, fuel etc are bought at East coast ports.
While there appears to be evidence that the number of registered vessels over 10m that were landing king scallops in 1999 were some 8.6% down on 1998 (
Table 3.2), other evidence (
Table 3.3) points to similar numbers of vessels fishing for scallops over 1998 and 1999. Furthermore there is little evidence of vessels being sold and removed from scallop fishing as a result of the bans. However, more recently, evidence from fishermen themselves suggests that a number of vessels have been decommissioned or sold.
Average vessel earnings are down from 389,000 for the UK fleet in 1998/9 to 280,000 for the Scottish West Coast vessels in 2000/1 or some 28% per vessel. At the same time, fuel costs have risen from 7.6% of earnings to 12.5%. As a result, owners' expenses are now 65,000 compared to 47,000 three years ago. This has meant a decline in profitability from 40% of earnings before depreciation and interest, an unsustainable and perhaps exceptional figure, to about 20%. When depreciation and interest are taken into account this suggests that the West of Scotland fleet is currently just breaking even.
Based on an income multiplier analysis, it is estimated that direct, indirect and induced income fell by 3.0m - 8.4m between 1998 and 1999.
There is anecdotal evidence that divers are the first to leave the industry with a scaling down in some diving operations evident.
The reaction of processors to the closures has been mixed. Some smaller processors have been forced to close as their supplies have stopped. For many, scallops only account for a relatively small part of their output and they have relied on other products, especially crabs, to keep them going. Larger processors have been able to source supplies from elsewhere, especially the south-west of England and the largest processors have maintained production, if at lower levels, by importing supplies particularly from France.
It has also been estimated (based on
Table 3.7) that the Scottish balance of payments deteriorated by about 5m in 1999 as a result of the problems to supply caused by algal toxins. In addition, a further loss in the region of 2.5m is likely for 2000.
On balance therefore, it would appear that the Scottish scallop sector has survived the catching bans imposed because of the presence of algal toxins. There is some evidence that the number of divers has reduced. It is also likely that vessels have been operating on reduced profits and incomes which is possible in the short term but not sustainable in the long term.
The options for government in essence reduce to assisting the industry reach a soft landing in the face of an inevitable situation. It is not the business of this report to consider the normative aspects of closure measures but only to analyse their potential impact.
The options include offering retraining for those who lose their jobs, and this can probably be achieved under existing schemes since the numbers involved are relatively low and very widespread.
For the vessel owners, whatever the size of vessel, decommissioning grants would be an immediate help. Other options might include funding to assist in converting a vessel to other uses, though the availability of other uses is very limited. The Scottish Executive expects 11 dredgers with a scallop entitlement to take advantage of the current round of decommissioning, subject to the owners' final decision.
For the farmers, assistance with converting to other products may be necessary and assistance with cashflow problems through soft loans may be beneficial, subject to their being permitted by the EU as part of regional aid. Otherwise compensation for the lost capital investment may be appropriate.
There is little that can be done to help the processing sector apart from some assistance with finding markets for white meat only product if that becomes necessary.
Grants to assist start-ups in businesses outside the fish production sector would help some re-direct their efforts, and a contribution through the EU PESCA initiative or other EU sources may be available.
For most of these the liability of the government would be relatively small and finite. Only with a situation of continuing temporary closures might the government's liability be indeterminate.
« Previous | Contents | Next »